we made it to the end of another year and let's face it the holiday season has probably taken a tool on your wallet but here's a good news a new year is around the corner and this is your chance for a fresh start to buckle down on your finances and focus on building your savings in today's video I'll share seven practical ways to double your savings so that you can work smarter and not harder on your path to Financial Freedom so let's Dive Right In tip number one use a no-brainer bucket method you've probably heard
every Finance Guru talk about budgeting but let's be honest who has time for complex spreadsheets especially if you're always on the go and this is where the bucket method comes in it's a simple 30 second way to budget and this is how it works whenever your paycheck hits your account immediately divide it into these three buckets the first is for Necessities the second is for fun and the third is for savings the easiest way to implement this is through automation so set up your bank account so that your paycheck is split automatically on payday why
does this work well it's because it simplifies budgeting it reduces the guesswork instead of dealing with one big pot of money that can feel like a freefor all the bucket method ensures every dollar has a purpose it also makes it easy to track your spending in each category without feeling overwhelmed this method is a modern take on the envelope system where cash is divided into physical envelopes for different types of expenses while that approach worked for some today's digital banking makes the bucket method more practical the effectiveness of of this approach lies in behavioral Psychology
by assigning every dollar a purpose you reduce impulse spending and boost your savings rate in fact a study by Noble Laurette Richard theor found that mental accounting dividing money into specific buckets helps people spend less impulsively and stay on track with financial goals Thor's research highlights how creating separate mental accounts for different expenses make it easier to control spending and prioritize savings so you are probably wondering how much should you allocate in to each bucket a common guideline is the 503020 rule which is 50% for Necessities like housing transportation and groceries 30% for fun like
dining out entertainment travel and hobbies 20% for savings such as your emergency fund contributions to your retirement account as well as paying down debt so let's say that you make $60,000 after taxes then $30,000 would go into Necessities $188,000 into fund and $122,000 into your savings every year of course of course the split may vary depending on your income expenses and location so if the 503020 doesn't work for you don't worry we'll explore ways to customize it in the next following tips tip number two determine your number the first step in any savings plan is
to Define your goal what are you saving for and how much do you need if you're unsure where to start check out my seven steps to Financial Freedom video over here but let's say that your goal is to save out $50,000 for a down payment on a house now you have a clear Target to work towards according to a study by Dr Gail Matthews a psychology professor at Dominican University in California individuals who write down their goals are 42% more likely to achieve them compared to those who don't this emphasizes that setting a clear measurable
goal provides Focus motivation and accountability without one it's easy to lose track or let other priorities take over so now that you have a number in mind let's move to the next tip on tip number three divide and ER saving $50,000 can feel overwhelming but here's the trick break it into smaller actionable steps for example to save $50,000 in 4 years you will need to save $112,500 per year that's $1,442 per month or $261 per week and using our previous example of $60,000 after tax this savings goal is totally doable if you set aside 21%
of your income every year by breaking down your savings goal and accomplishing these smaller Milestones you'll build momentum and maintain motivation towards your larger Financial objectives to stay motivated use a visual tracker like a whiteboard or chart on your refrigerator or in your office or bedroom and every time you hit a milestone like your savings goal for the month make sure that you check it off because small wins build momentum and keep you on track tip number four take a hard look we've already talked about the bucket method but if you're serious about your finances
and you're willing to invest a little bit more time every month then budgeting is definitely the way to go I know budgeting doesn't come naturally to many people but think of it like planning a road trip imagine you're driving across a country without a map or GPS you might take wrong turns waste time and gas or even run out of money before reaching your destination budgeting acts as your financial road map helping you plan your route allocate resources for Essentials like gas food and lodging and ensuring that you get to your destination without unnecessary detours
without it you're essentially driving blind and hoping for the best when you start budgeting you gain valuable information about your money specifically how much money is coming in and how much money is going out what often surprises people is their spending at the end of the month when you add up all your expenses you might realize just how much waste there is that awareness is the very first step towards taking action to improve if you're not sure where to start with budgeting I actually have a video linked over here where I go through my own
allocation of income and expenses every month one of the easiest ways to cut back is to eliminate unnecessary expenses this can mean canceling subscriptions you don't use cutting back on uats or door Dash orders and while all that would help it's not the real game Cher in your savings Journey instead focus on actions that truly move the needle so let's talk about that in our next tip tip number five move the needle let's talk about big wins small wins like skipping your daily coffee can help but they won't really dramatically change your financial situation instead
focus on your top three expenses housing transportation and taxes these are where you can make the biggest impact and where you can really move the needle when it comes to saving and you can still enjoy your daily coffee while you're at it if we are working with the 503020 rule from tip number one then Necessities like your housing and transportation shouldn't exceed more than 50% of your take-home pay if you were to break it down even further for housing aim to spend no more than 30% of your income and for transportation stick to 10 to
15% of your income if your spending in these areas is higher you may not only be experiencing the very real inflation that everyone is experiencing right now but also lifestyle inflation one unique way that I addressed this in my mid-20s was moving to Korea for a couple years Not only was my salary higher but I also reduced my cost of housing and taxes by more than 50% as for transportation I spent almost next to nothing as I Liv 10 minutes walk walking distance to the office as for taxes make sure that you take advantage of
tax deductions and taxfree growth by Saving and investing in your rrsp fhsa and tfsa these tax savings can equate to thousands or even tens of thousands of dollars every single year if you want to learn more about tax accounts make sure that you check out my video linked over here tip number six don't let your cash sit idle you wouldn't believe how many people leave their savings sitting in a checking account as mentioned in in my previous tip make sure to take advantage of tax advantage accounts available in your country and Within These accounts the
most important thing is that you're actually investing your money investing doesn't have to be complicated it can be as simple as placing your money in hisa or a highin savings account so at least you're earning some interest income instead of leaving it in a checking account where it earns no interest income at all another option to consider is gic's which stands for guaranteed investment certificates which are are a safe way to earn higher interest income especially if you need your cash within the next year or two for long-term goals like retirement it's worth learning about
investing in ETFs which stand for exchange Trader funds for growth or dividends if you're not sure where to start I have a video linked over here explain the different types of ETFs that you can explore letting your cash sit idle means losing out on free money that you could be earning passively so take that first step today to move your money into a high interest savings account or at GIC while you decide on your next investment strategy tip number seven think longterm we've covered tips that can help you start doubling your savings today now let's
talk about how to compound those savings over the next few years there are only two ways to accelerate your savings you could either decrease your expenses which means that the lowest you can go is $0 or increase your income which essentially has no limit to enjoy the fruits of your efforts in the future you need to start planting the seeds today one action you can take is is finding ways to build multiple income streams one of the easiest ways to start is by investing in your own skills this can mean improving your existing skills Rel
to your current job or learning an entirely new skill investing in skill building can lead to a promotion at work allowing you to earn a higher salary or it can help you start a side hustle or even a full-fledged business personally I recommend exploring service-based businesses because they require little to no Capital to start and often allow you to earn income much faster compared to other types of businesses by increasing your income over the next few years while keeping your expenses steady you can accelerate your savings and achieve your financial goals even faster and if
you found these tips helpful make sure to give this video a thumbs up and subscribe for more content like this and let me know in the comment section down below which tip you'll start with don't forget to check out my other videos linked over here for more financial tips thanks so much for watching and I'll see you guys in the next one bye
